Tesla shares surged over 12% in premarket trading following Donald Trump’s victory in the US presidential election.
In addition to Tesla, Trump's media company, Trump Media & Technology Group, rallied sharply, rising 30% as small-cap, domestic-focused stocks surged amid expectations of favorable policies under a potential Trump administration.
The sharp gains in Tesla shares were largely driven by investor sentiment around CEO Elon Musk’s vocal support for Donald Trump throughout his campaign.
Musk, who has aligned himself with Trump's pro-business stance, stands to gain influence under Trump’s administration, with Trump promising to consider Musk for a government efficiency commission if re-elected.
The S&P 500 and Dow futures soared to record highs on Wednesday, with the Dow up more than 1,200 points as markets anticipated possible corporate tax relief, deregulation, and economic measures favoring U.S.-focused companies.
The Russell 2000 Index also saw futures climb 5.6%, bolstered by confidence in pro-domestic production policies.
Key financial stocks rose sharply as well, with shares of major banks such as JPMorgan, Bank of America, and Wells Fargo up between 5% and 6%, riding on investor optimism for a lighter regulatory environment.
In anticipation of a pro-business Trump presidency, cryptocurrency-related stocks benefited from Trump's pro-crypto stance.
Shares of Coinbase, MicroStrategy, and Riot Platforms jumped by 11-14%, and Bitcoin reached a new record high.
On the other hand, U.S. renewable energy companies, including NextEra Energy and First Solar, fell by 7.5% and 11%, respectively, as Trump's policy stance includes rolling back climate regulations established under the Biden administration.
“A Trump presidency would give markets the clarity they crave, with policies that may drive growth through deregulation and potential tax relief," said Hendrik Du Toit, CEO of Ninety One, told news agency Reuters.